How to spot A Rising or Fake Cryptocurrency

Indeed a decade ago, the mass use of cryptocurrency sounded like a distant reality from a science fiction film. Only a

handful of people believed in the financial revolution of cryptocurrencies. 

Many of the early Bitcoin investors sold their coins for dirt cheap in the early days as they never believed they would be accepted as a medium of transaction. Some early investors can’t even remember the passwords to the hard disks they used as cold wallets.

Fast-forward to the present, and many businesses today accept Bitcoin and other cryptocurrencies as regular payment options.

The Data Always Backs a Promising Coin

The early Bitcoin investors didn’t have much data to rely on. Having faith in the eventual popularity of Bitcoin was crucial to their success. Today, we have access to real-time data on the crypto markets. It’s relatively easier to scan for the next superstar among the numerous crypto underdogs in circulation.

Learning the best methods of analyzing a crypto’s performance will help you greatly. A good analysis method will tell you more than where prices are going. You can learn what influences the prices of different coins and how the market perceives them. The most promising coin will grow in value organically and hold up its demand.

A User-Friendly Coin Is a Good Bet

Mainstream industries and companies accepting cryptocurrencies for payments are a good sign. Online crypto casinos pick coins based on usability and security. For an underdog to gain acceptance, it must be user-friendly.

A crypto that is easy to use even by less tech-savvy people will rapidly grow in demand and rise in value. According to Blockchain experts investing in cryptos with a smartphone app is safer than buying web-based crypto.

A Low Maximum Supply Cap

No more coins can be produced when a cryptocurrency hits its supply limit. Miners will have to close operations, making it hard to come by. It’s important to identify the capping limit of a coin before investing. Buying early into a coin before it hits its limit could give you great returns.

Cryptocurrencies like Bitcoin are produced gradually until they hit the cap limit, while other providers may opt to release all the coins at once. Newer blockchain providers choose to send cryptocurrencies to inaccessible wallets to boost their value. All these strategies ensure that the coins are not inflationary so they hold their value well.

Ultimately the harder a crypto coin is to find, the higher its value and likely acceptance by major industries will be.

Why scams are so common in the cryptocurrency world

A lot of people are attracted to cryptocurrency by the prospect of getting rich quick. These are precisely the people who can most easily be scammed by promises of getting rich quick. There are news stories about people buying just a few hundred dollars worth of cryptocurrency and becoming millionaires.

Many of the people attracted to cryptocurrency are not sophisticated in detecting scams. They don’t understand the details of cryptocurrency or the risks involved. They don’t know how to tell a legitimate offer from a scam.

The cost of getting accurate information about cryptocurrencies is very high. Experts disagree about almost anything and it’s almost impossible to easily get accurate information. Scam sites look just like legitimate sites.

Cryptocurrencies can be very easily moved around the world and exchanged for money wherever they wind up. They can be very difficult to trace. This makes them very attractive to scammers.

How to spot fake cryptocurrency 

The core idea of the view is that the end-user should take responsibility for keeping his assets safe. The problem with the growing digital world is the onslaught of tech-savvy, pathological liars who are trying to exploit people who are sometimes too trusting of shiny words.

The digital world, in general, resembles that of the crypto market. Even if the government regulates many things, it cannot infringe on the freedom of the internet, anyone can post anything. Currently, anyone can make a beautiful website that will have an interactive interface with buzzwords written everywhere, promising to make a million in a day. Unfortunately, this is exactly the case.

There are a good number of companies that offer this or that in the digital world. The crypto market is plagued by such exploitative initiatives. They always ask for funds to be funneled into their tokens or ICOs and to keep the charade up until the moment of imminent disappearance. So how does someone identify a fake crypto project? Let’s go over it.

White Paper

A white paper is a critical document for any company trying to pitch their idea to potential investors. It establishes the core concept of their product and explains why it is better than the competitors. It’s more of a marketing document than anything else. 

However, the lack of one is a clear red flag. It is worth noting that having a white paper doesn’t mean that the intentions are pure, but a lack of one signifies the lack of responsibility from the developer’s side.

There are many scam cases with or without white paper. For example, Bitconnect did not have its whitepaper present for investors. As it turns out, it was a huge Ponzi scheme with several individuals promoting it left and right. 

These people would host big, flashy conferences and scream in the microphone about how awesome their product is. It attracted an extreme amount of investors to finance the project. Bitconnect is regarded as the biggest Ponzi scheme in the history of cryptocurrencies with a $2.6 billion project value.

At the same time, we have PlexCoin, which had a very convincing white paper. This project managed to connect as much as $15 million and was fortunately shut down by the United States Securities and Exchange Commission (SEC). While this proves that white paper is not a full-proof method of determining if the project is legit or not, it is a great start.

Check Out the Road Map

Any project that will gain public acceptance and excel as a useful project must have a definite function to play in making the lives of users better. This is easily seen in the Road Map of such a project. For instance, Bitcoin, the number one cryptocurrency and also the first to be created, had a clear description and purpose.

According to the white paper, it is “a purely peer-to-peer version of electronic cash would allow online payments to be sent directly from one party to another without going through a financial institution.”

Looking at this statement, it is clear that Bitcoin is meant to make value transfer easier and remove the hassle of having to go through centralized financial institutions. To verify if a project is genuine, look at the description of its function and the road map. If it is not out to solve a definite problem, it may not be a trustworthy project and may not last long, even if it is a genuine one.

The Team

Every crypto project is led by a team of individuals. These are people who are making the project a success in the first place. It is important to root for a project with strong leadership. Like when Ethereum was starting with Vitalik Buterin.

What scam companies do is that they try to come up with some celebrity. They steal someone else’s picture and make fake social media accounts. These profiles are then boosted by other fake profiles to seem like they have a huge number of followers. 

Always check their posts and responses. It is easy to understand that if someone has 1 million followers and gets 10 likes per post or never posts anything in the first place, maybe it is most likely a fake.

Even if the development team is real, it still falls onto the user to understand if they have an actual background to do whatever they set out to do. The moment you invest in the project, success is going to be equal to your success. Make sure to be thorough.

Token Sales

This is an interesting one. What some scamming companies do is that they hide the token sale progress from the investors. This creates a certain sense of urgency for investors since they do not know how soon the whole deal is going to close. Apart from this, the fact that people cannot track how the progress is going means there’s something to hide in the first place, and the initiative should not be trusted.

New projects, such as ICOs, usually have audiences on major social media platforms, such as Twitter, Facebook, and Telegram, where those interested in them can discuss issues and ask the admins about the project before investing in them. If the token sale is not transparent enough to engage participants and give them real-time updates on the progress of the project, that should be a red flag pointing to a fake project that you should stay away from.

Every project needs marketing and promotion to thrive. However, some promotional strategies point to the fact that the project is fake. The strategies adopted by genuine projects are usually with long term goals in mind and not with the aim of growing rapidly in the short term. Some even span over several years, so if you see that the promotional method seems to focus on generating quick revenue without any long term plans, they are probably projects to stay away from.

Genuine crypto projects need time to grow and will generally do so naturally. In addition, these types of projects usually have a good reputation within the crypto community, so many people should be able to give a good report on it. You should discuss in forums online and with friends to check if they have heard of the project and verify its authenticity before committing to it.

Reasons why Government won't Ban Bitcoin/Cryptocurrency

1. Bitcoin is a free system, protected by the First Amendment of the U.S. Constitution

2. Governments will seek to take advantage of mining activities by taxing them

3. Banning the use of Bitcoin by users is hardly enforceable

4. All these angles of attack require concerted action at the global level to be effective, but it won’t happen

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